Arizona proposal would restore health care to 19,000 children

Gov. Jan Brewer and state hospital executives unveiled a proposal Monday to temporarily restore health-care coverage to tens of thousands of Arizona children.

The plan, which requires approval from the federal Centers for Medicare and Medicaid Services, would allow more than 19,200 children on a waiting list to enroll in KidsCare, a state-subsidized health-insurance program for low-income families.

The state froze enrollment in the program in January 2010 as part of cost-cutting to close a budget deficit. The number of children covered has since dropped to about 14,200, down from 45,820 at the time of the freeze.

There are now more than 120,000 on the program's waiting list.

The new plan was initiated by Phoenix Children's Hospital, Maricopa Integrated Health System, and the University of Arizona Health Network, which will collectively pool $113 million for each of the next two years, in order to receive $229 million in extra federal funds.

The money will help both the hospitals and the state by providing more coverage to uninsured children while getting money from Washington to offset the cost of providing care for which hospitals are not compensated.

The state will not be required to contribute any money.

"Working together, we can find creative solutions," Brewer said Monday, also calling the proposal a "bridge" to help restore coverage until the fate of the federal health-care overhaul is resolved. "Locally designed solutions, not federal mandates, are the best way to move forward."

The Legislature paved the way for the hospitals' plan earlier this year with Senate Bill 1357, which allows AHCCCS, the state's Medicaid program, to authorize other government partners to pay for Arizona's share of health-care programs that trigger matching federal funds.

Under the plan, most of the federal dollars the hospitals receive would offset the cost of uncompensated care, and about $44 million would go to the KidsCare program.

The proposal includes federal dollars for needed improvements at the three "safety net" hospital systems.

Those improvements include establishing an expanded electronic health-record system at MIHS, expanding trauma services at the UA Health Network and adding beds and services at Phoenix Children's pediatric trauma center and emergency departments.

But it's anticipated that covering uncompensated care costs will chew up the bulk of the funding.

UA Health Network has absorbed about $2 million in monthly costs since state-approved cuts to the Arizona Health Care Cost Containment System population went into effect Oct. 1.

MIHS spokesman Michael Murphy anticipates the AHCCCS cuts and rising cost of uncompensated care will cost his hospital system about $5 million a month.

"It isn't a complete solution," Karen Mlawsky, CEO of the University of Arizona Medical Center in Tucson, said of the plan. "But it is an effort to try to improve our situation."

Officials with the Governor's Office said it would likely be late January or early February before the state would receive federal approval to expand KidsCare, which is part of AHCCCS.

AHCCCS spokeswoman Monica Coury said once the federal government approved the proposal, the agency would work with families who have been on the waiting list the longest, helping them to reapply, until the program hits the target number of 19,283 new patients.

The reinstatement would be a temporary, two-year expansion.

KidsCare provides health coverage to those families who make too much to qualify for Medicaid. For example, a family of four with an annual of income of $44,700 could be eligible.

The state created it in 1998 as part of the Children's Health Insurance Program, a national effort to reduce the number of children without health-care coverage, but the future of Arizona's program has been uncertain in recent years.

Lawmakers initially terminated the program, citing the state budget deficit. But faced with losing up to $7 billion a year in federal Medicaid dollars, they restored it.

The result was an enrollment freeze that reduced the state's costs but ultimately meant the number of children covered would drop precipitously.

The temporary expansion of Kids-Care comes as the state has cut hundreds of millions of dollars from AHCCCS.

The federal government previously approved a cap on enrollment for childless adults, which prevents new people from being eligible, as well as those who fall off the rolls for any reason.

Attorneys for low-income Arizonans who have been denied coverage have challenged the freeze in court. Voters in 2000 expanded AHCCCS to include everyone below the poverty level.

Federal officials also approved the elimination of the "spend-down" category, which affected about 6,000 people receiving AHCCCS coverage because medical bills had reduced their income to 40 percent of the federal poverty level.

In both cases, the coverage was considered optional because it went beyond minimum Medicaid requirements.

Tara McCollum Plese, director of government and media relations for the Arizona Association of Community Health Centers, said the number of children on the KidsCare waiting list demonstrates the need for more creative solutions to cover the population.

The statewide clinic network treats many patients who rely on KidsCare coverage.

"It's a good start," Plese said of the plan, noting that many parents who used to have KidsCare coverage haven't taken their children in for routine immunizations and checkups.